MedPAC Pushes for New Payment System by 2021 Amid Industry Concerns

A new report from the Medicare Payment Advisory Commission (MedPAC) recommends that Congress quickly overhaul the payment system for post-acute care by transitioning away from the current fee-for-service (FFS) system.

MedPAC submitted its twice yearly report to Congress in June, affirming that the overhaul of the payment system for post-acute care (PAC)— referred to as the prospective payment system (PPS)—could come into effect by 2021. MedPAC members unanimously voted to approve the speedier timeline in April.

Adopting a unified PAC PPS and redistributing payments across providers would put an end to issues in the current system, such as incentives to favor certain types of care for certain patients, according to the report.


MedPAC has also recommended cutting the aggregate level of payments to Medicare providers by 5% “to more closely align with the cost of care.”

Though the commission called for the new PPS to begin in 2021, that’s about three years earlier than originally laid out in the Improving Medicare Post-Acute Care Transformation (IMPACT) Act, the legislation that established the commission and tasked it with making payment recommendations.

Industry backlash


MedPAC suggests the early rollout could work, “assuming some regulatory alignment is underway,” but there are plenty of reasons not to “rush to reform,” according to the National Association for Home Care & Hospice (NAHC).

For starters, MedPAC is looking at home health services in the post-acute care payment model “in a cavalier manner” by not addressing where home health services reimbursements end up, the association wrote in a blog post.

“Instead, MedPAC simply says that there would need to be an adjustment to the rates to account for the differences in cost occurring because home health services do not include room and board,” the NAHC said.

Another worry is that MedPAC doesn’t acknowledge the fact that over half of all Medicare home health spending is centered on community admissions, not post-acute care, according to the NAHC. The association also suggested the changes should follow full implementation of IMPACT Act due to the significant behavioral adjustments in patient care it will likely trigger.

“Overall, NAHC is concerned that MedPAC encourages a ‘rush to reform’ while post-acute care is a moving target given the numerous reimbursement system changes underway in many of the PAC sectors, the application of value-based purchasing innovations, PAC bundling, and other systemic reforms that may completely change the PAC environment,” the association concluded.

Despite NAHC’s list of worries, MedPAC recommendations are often not followed, and Congress does not need to heed its recommendations.

Written by Tim Regan

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